Research Findings

August-September 2015

Jeff MeredithDirector, Analyst Relations

MX

Analyst Relations: Aug-Sept 15• 14 Inquiries w/Forrester, Gartner & Javelin analysts covering such topics as: * Next generation DMM features * Envestnet acquisition of Yodlee * Digital cross selling * Omnichannel banking providers (partners including Backbase & Q2) * Geolocation * Small business * Wealth management

• MX personnel joining calls: Mike Bates (6), Amanda Elam (3), Don Parker (3), Eric Fearday (2), Nate Caldwell (1), Brennan Knotts (1)

• 3 Vendor Briefings scheduled, one each with Gartner & Forrester around our entire product suite

and one with Forrester around small business/predictive capabilities

• 2 Report Mentions: MX will be appearing in Gartner’s Market Guide for Digital Banking & CEBTower’s 2015 Personal Financial Management Tools Market Update during Q4. We anticipate inclusion in an IDC PFM report & an Aite account aggregation report.

Next Generation Functionality: Social Benchmarking/

“People Like Me”

“The people like me idea, that’s very quickly a differentiator for DMM. Not just saying ‘I see I spent a lot on restaurants’ but ‘People like you tend to spend half as much on restaurants.’” - Peter Wannemacher, Forrester

“Something else essential is forecasting tools, like a safe to spend. Customers know how much is in their accounts but how much will be at the end of the month? Make it more predictive.” - Aurelie L’Hostis, Forrester

The cash flow feature within Small Business is predictive & will be detailed in an Oct 2 briefing

Next Generation Functionality: Predictive Tools

“Several vendors, notably Strands and Meniga, use transactional data and customer profiles to deliver merchant-funded or “card-linked” offers, matching customers’ spending patterns with merchants’ deals using algorithms and then offering relevant merchant deals to customers through digital touchpoints.” - Forrester’s Pick The Right Digital Money Management Technologies (Jan 2015)

Building The Feature Set: Card-Linked Offers

“Game mechanics. Some solutions feature game elements to encourage customers to explore digital money management further. Misys encourages customers to engage with digital money management by enabling them to share their goals with friends and family through social media and rewarding them with points.” - Forrester’s Pick The Right Digital Money Management Technologies (Jan 2015)

Building The Feature Set: Game Mechanics

“Money management vendors have seen opportunities in both small business banking and wealth. If you're running a small business understanding your cash flow is more vital than for most consumers. And for wealthy customers having a better perspective on their overall portfolio has quite a bit of value. Small business and wealth customers are typically worth more to your average retailer.” - Benjamin Ensor, Forrester

Building The Feature Set: Small Business & Wealth

“Strands has lost accounts over the last few years, that makes me think they're struggling and someone's going to probably buy them.”

“Meniga looks like the strongest. They may stand on their feet the longest without being acquired.” “eWise doesn't seem to have a lot of success, they were the first into market with Yodlee in 1999. I have not heard much about eWise winning accounts.”

“D3 and Jwaala, haven't seen them winning much business, haven't heard much about them. Maybe that's not fair or we're missing something.”

Benjamin Ensor, Forrester

Competitive Intelligence

“After IPOing in October 2014 at a $340 million market capitalization, Yodlee was acquired for $590 million, a staggering 73.5% climb in little over 10 months. It is now clear that personal financial management — and the powerful data it delivers for both consumers and financial institutions through aggregation, a complete view of a user's finances — has arrived and is a force to be reckoned with.” - Jeff Meredith, MoneySummit

“After opening at $42 a share on August 11, Envestnet closed at $29.38, representing a more than 30% decline in market capitalization. Since then, Envestnet has done relatively well against the overall market; while the S&P 500 dropped 6.88 percent between August 11-26, Envestnet shares rose slightly to $30.08. This still represents a 48.3 percent decline from the company's 52 week high set on March 16, more than 6x the decline in the S&P 500 over the same time period.” - Jeff Meredith, MoneySummit

Gartner Recommendations

Analyst ReactionThis represents “the general move for wealth managers to be more holistic or comprehensive. A big challenge seen in the realm of financial planning is that many people call themselves financial advisers and they often have a very slim piece of the person's finances. Someone with a Series 7 can be an advisor on stocks and bonds and investments but they know nothing about insurance needs, estate planning, taxes, cash flow, loans, credit… This is part of that recognition that anyone who wants to be an advisor has to expand their game and talk about more than investments. To have insight with PFM expands their insight into people. Now you can expand into financial planning and things in a way a certified financial planner would.” - Mark Schwanhausser, Javelin Strategy & Research

“Envestnet has a big portfolio of wealth management solutions … I think they're going to move towards mass affluence, at the same time leveraging the tools that Yodlee has to improve wealth management. It’s going to push providers to do more than just consumer PFM, it will result in more acquisitions by the larger legacy financial services providers. Because all of a sudden now, Envestnet - that no one in retail banking was thinking about - is a player.” - Stessa Cohen, Gartner

“If you look at the portfolio of companies they've acquired - PFM portal, account aggregation, CRM, financial planning, portfolio analytics - it could be a very powerful new type of portal front end in the fragmented value chain of financial services … There’s a huge potential that Envestnet will create a pretty powerful front end, they have plenty of solutions that would in the broad advisory portfolio.” - Jost Hoppermann, Forrester

Analyst Reaction

Digital Cross Selling• Challenges: “One of the main reason (FIs) are bad at

it is that they’re still very product driven and product siloed (i.e. credit card & mortgage teams). Digital is not incentivized on cross sell targets.” - Alyson Clarke, Forrester

• Cross selling has to be needs-based: “Instead of setting up 5 products per customer how about we focus on need? It might be short term savings, long term, protection needs (insurance), investment needs, lending needs. When you understand those needs you’ll have products underneath; it gives you more of a customer focus.” - Alyson Clarke, Forrester

Forrester Recommendations

Risks Around Digital Cross SellingBargain hunting customers met with sub-optimal offers: “They’ll already have the capability to ascertain what are the best offers that will be available to them based on their existing financial history … by presenting something to your customer which isn’t best in terms of price or service proposition, you’re eroding some of the relationship between you and customer.” - Alistair Newton, Gartner

Omnichannel Banking Providers• Backbase took top honors in

Forrester’s Omnichannel Banking Solutions Wave. Forrester analyst Jost Hoppermann did warn that their “service organization may be on the small side right now compared to their client base. Maybe because they grew too fast that the service organization could not catch up.”

• FIS purchase of SunGard: FIS has failed to restructure acquired companies. “Will it add more revenue? Yes. Will it add more profit? I don’t know,” says Hoppermann. FIS has 13+ channel solutions, only 3 or 4 of which are considered modern.

• Up and comers: TCS, Tagit, Ubanquity & CR2